The crypto market showed signs of resilience on Thursday, with bitcoin adding 1.1% as of midnight UTC after falling below $60,000 on Wednesday to its lowest level since October 2024.
The largest cryptocurrency remains at a critical level in terms of the broader market structure. A possible price drop could cause a drop to around $52,000. For now, it appears to have weathered the storm.
Ether (ETH) rose 1.5% on Thursday and was recently trading at $1,644 after briefly falling to $1,550 around 17:00 UTC on Wednesday.
Thursday’s gains could possibly be related to a recovery in US stocks. S&P 500 and Nasdaq 100 futures rose 0.7% and 2.2%, respectively.
Derivatives positioning
- BTC again hit lows near $59,000 on Wednesday and has since recovered to over $61,000.
- Two-way volatility has proven costly for leveraged futures bets across the market. Centralized exchanges liquidated nearly $1 billion in cryptocurrency futures positions in 24 hours, with long positions accounting for the majority.
- Still, bitcoin futures open interest (OI) has risen to 763,000 BTC, the most since June 4, ending a streak of stability around 730,000 BTC. In other words, the price drop has caused an influx of money, but not necessarily on the bullish side. In fact, annualized funding rates have turned negative, a sign that traders are paying a premium for downside exposure.
- The ether futures market has not seen any notable increase in OI and funding rates remain slightly positive.
- SOL’s OI remains near Wednesday’s all-time high, along with largely neutral funding rates pointing to balanced market positioning. The same is true for XRP, whose OI is at its highest levels since October.
- The OI-normalized 24-hour cumulative volume delta for most coins, including BTC, is negative for the third day in a row. That is a sign that the bears are leading the price action by shorting at market prices instead of using passive limit orders.
- BVIV, which measures 30-day implied volatility in BTC, has retreated to 46% from a high of 51%. This decline in the so-called “fear indicator,” which represents options demand, supports the cryptocurrency’s overnight rally. The same goes for the ether implied volatility index, EVIV.
- Still, ether is considered to be more volatile than BTC, with implied volatilities richer by 10 points or more compared to bitcoin’s across all time frames.
- The options biases for the two largest cryptocurrencies indicate bearish concerns that are persistent and strengthening. For example, BTC’s one-week bias shows a volatility premium of almost 25 points for puts. This also means that bullish bets are currently cheap and could attract strong demand if Thursday’s US May Core PCE reveals a slowdown in inflation.
symbolic talk
- The altcoin market posted an exaggerated rebound on Thursday after Wednesday’s losses, a reflection of a low liquidity environment.
- Jupiter (JUP) fell more than 12% in six hours on Wednesday before rebounding more than 18%, wiping out futures traders in both directions.
- Data from Coinglass shows that $1 billion in futures positions were liquidated in the last 24 hours, of which $585 million was attributed to altcoin trading pairs.
- Decentralized finance (DeFi) tokens AAVE and ETHFI also performed well on Thursday, rising 2.5% and 4.7%, respectively, since midnight.
- Meanwhile, AI tokens struggled to recover. RENDER and NEAR posted losses of between 0.8% and 1.9% despite a rebound in other crypto sectors.
- The solana layer 1 network token (SOL) fell to $64 on Wednesday to complete a 75% drop since September. A break below the June 6 low of $60 would mark its lowest point since December 2023.
